Articles | Genders and Partners

5 Common Estate Planning Mistakes

Winston Churchill famously said “Those who fail to learn from history are doomed to repeat it”.

As the oldest law firm in South Australia, and specialising in Trusts, Wills, Estate Planning and Administration of Deceased Estates, we frequently encounter examples of people failing to take the proper steps to create an estate plan that will work properly when the time comes. Some people allow their families to learn the hard way, and fail to shield their families from costly legal messes.

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Estate Planning – Caring for Elderly Parents

Since 1900, life expectancy for Australians has increased by over 30 years. The average life expectancy of a newborn girl used to be 51 years. Now it is 84 years. But how do we care for our elderly relatives once they begin to lose the ability to care for themselves?

Over the past 125 years there have been massive changes in our health and lifestyle. What Australians now die of, and the age at which they die, is very different to what it used to be. Up until 1932, infectious and parasitic diseases caused at least 10% of all deaths each year, with death rates from these diseases highest among the very young and very old. Improvements in living conditions, such as better water supplies, sewerage systems, food quality and health education, have led to overall lower death rates and longer life expectancy at all ages.

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Who gets the jewellery?

When administering a deceased estate, love and law can intersect in the context of grief, causing problems for those left behind. Small things can set-off major family feuds.

For most families, a desire for personal effects is less about what they are worth and more about their sentimental value. Medals, jewellery and personal items are often the subject of strong feelings.

People in grief can behave irrationally, and their high emotions can create powerful symbols out of ordinary objects – a grandfather’s watch, a necklace, the rings mother wore – and in their minds the items become confused with how much the deceased loved them, rather than the market value of the items in question.

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Probate and Estate Administration: Successful Challenge to Deceased Estate from Secret Domestic Partner

A recent court decision in Victoria (Estrella v McDonald) is one of Australia’s first reported judgments resolving a claim for family provision involving a same-sex relationship.

The claimant said that he and the deceased had been in a secret de-facto relationship for 30 years, after they met in 1978 when the claimant was 17 and the deceased was 51.

The claimant said that he and the deceased had commenced a sexual relationship and that he had moved away from his family in the Philippines to live with the deceased’s family for several years. During the deceased’s final years, the claimant was living overseas.

During his life, the deceased had denied that the relationship was sexual in nature as he had apparently been embarrassed to publicly or openly acknowledge the relationship, for fear that it may not be accepted by their families or community.

The deceased had made no provision for the claimant in his Will, which solely benefitted the deceased’s children who defended the claimant’s allegations on the basis that their father and the claimant were “just friends” and that the claimant lived in their home as a boarder.

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Starving Last in the Jungle | Genders and Partners | 7 Asset Protection Techniques

Protect your wealth – it’s a jungle out there

How many million-dollar lawsuits against homeless people do you hear about? None. That’s because lawsuits aren’t filed against poor people; they are filed against those with enough assets to make the expense of litigation worthwhile.

We all need to maintain an acute awareness of what can happen in ‘the modern jungle.’ None of us want bad things to happen to us and our families, such as bankruptcy, creditors, predators, gold-diggers, the ATO… but we need to keep our guard up against others who may not share our foundational assumptions of fair play and justice. Other, perhaps more aggressive ideologies, could run right over our sweet & trusting natures if we let them

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Where Did My Pension Go

In our shrinking world where travel and communication are faster and easier than ever before, it seems that ‘foreigners’ are being officially targeted by every government in the world.

The issue is everywhere in the media at present. Foreign corporations not paying enough local tax. Cashed-up foreigners trying to buy big chunks of our real-estate. From anti-migration walls to offshore detention facilities, it seems that the people holding the purse-strings are blaming foreigners as the reason for our economic decline.

So how likely is it that the Government would try to reduce the pension entitlements for Australians from migrant backgrounds as part of a budget-savings measure?

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Negative Gearing – hot potato or poison pill?

In Australia over the last 30 years, any spending in pursuit of rental income from an investment property is tax-deductible, unless the spending is of a capital or private/domestic nature. This is known as ‘negative gearing’.

The owner can claim a deduction for the cost of repairing an investment property, but not initial repairs when the property was first purchased.

Some commentators think that negative gearing has distorted the housing market. They point to negative gearing as one of the main factors in housing affordability having halved in real terms over the last 30 years since negative gearing has been in place.

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Increased tax on Super income

Earnings from superannuation accounts for retirees in the pension phase are currently taxfree.
In April 2015 the Federal Opposition (Labor’s Bill Shorten) proposed that Super earnings $75,001 and above be taxed at 15 per cent. The Labor Party estimates that would affect about 60,000 people and raise $9.2 billion over 10 years.
I predict that the Government will introduce a threshold above which extra rates of income tax will apply to Super income. Whether that threshold is $75,000 or $150,000 or some other number, I don’t know. But I’d be willing to bet that it’s too big a honey-pot for governments to resist for much longer.

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Capping or removal of CGT exemption on family home

At present, the family home (principal place of private residence) is exempt from Capital Gains Tax. Some analysts have suggested that this concession is skewed towards the wealthiest in the community, and there is a push to remove this exemption for the most expensive residential properties.

In 2009 a report by the Brotherhood of St. Laurence and the Australian Housing and Urban Research Institute claimed this CGT exemption is worth on average $10,000 a year for the wealthiest 20 per cent of home owners, but worth just $1200 a year for the bottom 20 per cent of households. The suggestion is that it is unfair that those on the highest incomes are getting much more benefit than anyone else.

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Increased tax on Super contributions

During its last term in office, the Federal Labor party introduced a superannuation charge for people earning more than $300,000 annually, taxing these people’s contributions at 30 per cent, while everyone else pays 15 per cent on contributions.

In April 2015 the Federal Opposition (Labor’s Bill Shorten) proposed to lower the threshold to double the superannuation tax on contributions to 30% for many Australians to raise more than $5 billion over a decade.

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